Gasoline prices continue to creep lower

Jonathan Fahey | AP Energy Writer

Published 10:30 am, Thursday, April 26, 2012

Photo: Markell DeLoatch

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In this Thursday, February 23, 2012, Steve Spencer, who owns Spencer Construction, buys gas for his work truck at Miller's Sunoco, in Chambersburg, Pa. U.S. drivers will pay an average of 24 cents more per gallon for gasoline during this summer's travel season, the government said Tuesday, April 10, 2012. The Energy Information Administration said gasoline should cost an average of $3.95 per gallon from April through September, an increase of 6.3 percent from the same period last year. (AP Photo/Public Opinion, Markell DeLoatch) HAGERSTOWN MD.; WAYNESBORO OUT less

In this Thursday, February 23, 2012, Steve Spencer, who owns Spencer Construction, buys gas for his work truck at Miller's Sunoco, in Chambersburg, Pa. U.S. drivers will pay an average of 24 cents more per ... more

Photo: Markell DeLoatch

Gasoline prices continue to creep lower

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NEW YORK (AP) — Retail gasoline prices continued their surprising spring slide Thursday, dropping a penny to $3.83 per gallon.

It's the 10th straight day of declines for the national average retail price. Pump prices are 4 cents lower than they were last year at this time.

Retail gasoline prices typically rise in the spring and peak for the year in May after refiners switch to a more expensive summer blend of gasoline that is required to meet clean air rules. Analysts say this year's spring peak may have come early — a relief to drivers show saw prices rise 66 cents from Jan. 1 through the first week of April.

Gasoline prices have fallen from a high of $3.94 per gallon on April 6 as this year's rise in oil prices has leveled off and U.S. gasoline demand has fallen.

Missouri drivers enjoyed the lowest average price in the U.S., at $3.56 per gallon. California drivers are paying $4.18, the highest in the nation outside of Alaska and Hawaii. Drivers in Connecticut, Illinois, New York, Oregon, Washington and the District of Columbia are all still paying more than $4 per gallon on average, though, according to the Oil Price Information Service, AAA and Wright Express.

Benchmark crude rose slightly Thursday to $104.55, a gain of 0.4 percent, on expectations that the U.S. economy will continue to grow modestly and that the European debt crisis would not spread further.

Brent crude, which is used by refiners to make most of the gasoline sold in the U.S., rose 80 cents to $119.92.

Natural gas prices fell at the end of the trading day to $2.036 per thousand cubic feet, a decline of 3 cents, after spending most of the day in positive territory.

In recent weeks natural gas prices have fallen to their lowest levels since 2002 because a historically warm winter and increased domestic production have boosted the amount of natural gas in storage.

The U.S. government reported Thursday that natural gas in storage rose by 47 billion cubic feet to 2.548 trillion cubic feet for the week ended April 20. That's 56 percent above the five-year average. The report was in line with what analysts expected according to a survey by Platts, the energy information arm of McGraw-Hill.

There is some expectation that natural gas will begin to rise. The price inched upward this week on forecasts a cool May in the Northeast, which could increase demand for the fuel.

Also, utilities are taking advantage of low natural gas prices by using more of the fuel to generate electricity. And drillers are starting to cut back their exploration for natural gas because prices are so low that drilling has become unprofitable in most locations.

Still, Phil Flynn, an analyst at PFG Best, says whatever increase in demand that comes from cool May weather will not be enough to alleviate the country's natural gas glut. Also, he says drillers will have a hard time cutting back because natural gas is produced along with oil, and new drilling for oil is booming.

"The market is still broken," he says. "The only way to fix this market is a major sell-off."

At current consumption and production rates, the nation's natural gas storage facilities are on track to be full by October, before the annual supply draw-down for winter heating begins.